It take to achieve payback on the initial $2,000,000 tqm investment- Hence, It would take 14 months to achieve payback on initial $2,000,000 TQM investment
Option "2" ------ 14 Months
Given data
Investing in TQM = $2,000,000
Minimum increase in demand = 3.0 %
Last year’s sales = $163,508,343
As per the given data next year sales is increased by 3.0%. So, 3.0% of last year sales
=> 0.03 * $163,508,343 = $4,905,250.29 ~= $4,905,250
Revenue added to the bottom line = 34.1% of increased demand
=> 0.341 * $4,905,250 = $1,672,690.25~= $1,672,690
Payback on the initial $2,000,000 TQM investment can be achieved in a period can be calculated using the formula
=> (Investment in TQM / Revenue added to the bottom line) * 12
=> ($2,000,000 / $1,672,690)*12 = 14.34 ~= 14 Months
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